Picture-based crop insurance: Is it feasible? Is it sustainable?

This blog by the CGIAR Research Program on Policies, Institutions and Markets examines the feasibility and sustainability picture-based crop insurance (PBI). By taking regular pictures of their crops on smartphones, farmers can reliably document damage after a natural calamity and provide evidence that the crop was managed appropriately until that point. This can minimize the cost of loss verification. Two project notes describe the results from an evaluation of PBI in India, one focusing on the economic viability and sustainability (PDF) and the other on the feasibility of measuring damage using smartphone pictures (PDF). These project notes show that farmers are able and willing to take enough pictures of sufficient quality for loss assessment. They are also willing to pay more for PBI than for weather index-based insurance. Additionally, damage is visible from smartphone pictures and can be quantified by agronomic experts. Picture-based loss assessments are strongly correlated with yields and improve upon weather index-based measures. Based on these findings, PBI offers a promising alternative to existing insurance products for poor farmers. However, before scaling up, some challenges need to be addressed. Further automated image processing and loss assessment can attract more interest from private insurance companies and government. Also insurance products that work for other crops besides wheat should be developed. Furthermore, it might be necessary to aggregate images taken by the smartphone holders into a common pool that insurance companies could also use to evaluate damage on the poorer villagers’ plots, who can’t afford smartphones.

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